Credit risk transfers

Fannie Mae and Freddie Mac transferred a substantial amount of credit risk to the private sector through both single-family and multifamily market transactions in the first half of the year, with activity expected to rise in 2019, according to the Federal Housing Finance Agency.

When the mortgage giant will be released from government control is anyone's guess, but the company's third-quarter report shows signs of an easier transition.

The structure reduces counterparty risk in the GSE's benchmark Connecticut Avenue Securities program; it also expands the investor base.

The mortgages being reinsured are more seasoned than most other deals rated by Morningstar, which helps offset the risk of lower initial weighed average LTV.

The REIT is purchasing another $500 million of credit risk transfer notes through Fannie's L Street Securities program; this is its first deal rated by Fitch.

The GSE recently transferred $166 million portion of risk on $11.1 billion of loans via contracts with seven reinsurers and insurers; it plans to come to market two or three time a year going forward.

The $653 million Bellemeade Re 2018-2 is being rated by both Fitch Ratings and Morningstar Credit Ratings, though Fitch sees more risk to the transaction.

Freddie Mac produced modest second-quarter results, reflecting a stabilizing business that CEO Donald Layton compared to a utility company.

Nonbank mortgage-backed securities servicers increase their exposure to agency loans as the housing market distances itself from last decade's crash, according to Fitch Ratings.

Oaktown Re II is National Mortgage Insurance's first rated transaction, according to Morningstar; it reinsures $5.47 billion of policies on mortgages with a total balance of $30.12 billion.